The State's toxic loans agency said the move would generate an estimated 100 jobs during the construction phase, which is expected to last about 18 months.

When completed, the first phase will consist of 95 mainly three-bedroom and four-bedroom houses.

The site, in Millmount, Dundonald, will be developed by Baker Tilly Ryan Glennon, the court-appointed administrator to the site, and a subsidiary of Lagan Group.

NAMA chairman Frank Daly said it was a real statement of intent about its Northern Ireland loan portfolio.

"We are committed to supporting projects that can deliver a commercial return and I hope that there will be more projects like this in Northern Ireland," Mr Daly said.

Nama said the site had outline planning for 510 residential properties, which may be delivered in subsequent phases subject to market conditions and the success of the initial phase.

Asset

Mr Daly said the agency was faced with the prospect of selling the site to the highest bidder or funding the development to create a more valuable asset.

"We are confident that the choice we have made will deliver a better commercial return," he said.

"This is consistent with our policy – in Northern Ireland and elsewhere – of managing our assets from a long-term perspective and taking account of local market conditions," Mr Daly added.

The agency also said that it was in talks with a Northern Ireland mortgage provider and is examining the regulatory feasibility of extending its 80/20 deferred payment initiative to houses controlled by its debtors and receivers or administrators in Northern Ireland.

It is expected that the Millmount development will be suitable for the initiative.